Archive for May, 2012

In a troubling 6-1 decision, the Wisconsin Supreme Court awarded Attorney Vince Megna – the self-proclaimed “Lemon Law King” – a victory that allowed him and his client to walk away with over $700,000 in damages. This despite the fact that Megna and the owner acted in bad faith, therefore making it impossible for the manufacturer to provide a refund payment within the statutory 30-day deadline. The Court’s decision will make it easier for plaintiff attorneys to game the system and obtain large damage awards against auto manufacturers. The case is Marquez v. Mercedes-Benz USA, LLC, 2012 WI 57.

Facts of the Case and Background of Wisconsin Lemon Law

The facts involving the Supreme Court’s decision are important to understand how unfair and damaging the Court’s decision actually is to manufacturers. It is also important to provide a discussion of how Wisconsin’s Lemon Law operates.

The plaintiff, Marco Marquez, purchased a Mercedes-Benz E-series automobile that had mechanical problems triggering Wisconsin’s Lemon Law. Wisconsin law provides that “if a new motor vehicle does not conform to an applicable express warranty,” and the nonconformity is not cured after a “reasonable attempt to repair,” then the consumer may return the vehicle and elect to receive either: 1) a new comparable vehicle, or 2) a refund.[1]

If the auto manufacturer fails to provide a refund or replace the vehicle within 30 days, the law provides harsh penalties. For example, the owner is awarded “twice the amount of any pecuniary loss, together with costs, disbursements and reasonable attorney fees, and any equitable relief the court determines appropriate.”[2] “Pecuniary loss” includes the cost of the vehicle, which means that the plaintiff is awarded twice the cost of the vehicle. The plaintiff is also entitled to pre- and post-judgment interest, which can be large in cases like this that take years to wind through the court system.

After Mercedes-Benz was alerted that the car was a lemon, it began working with the owner and his attorney to provide the owner the proper remedy. Originally the owner sought a new vehicle, but instead of seeking a similar E-series he requested an S-series. Mercedes-Benz notified the owner that the 2007 S-series he requested had not yet been released to dealers, but told him that the company would work with him to get such a vehicle as soon as possible.

With just five days left remaining under the 30-day statutory deadline, the owner notified Mercedes-Benz that he changed his mind and instead of a new vehicle he wanted a refund. This was on the Wednesday (November 23, 2005) before Thanksgiving.

The Mercedes-Benz representative, Wade Messing, was not in the office either Thursday or Friday because of the Holiday, and instead traveled to Wisconsin on Monday, November 28 to issue the refund check to both the owner and his bank, which had issued a loan for the vehicle.

On November 28, Messing contacted the owner’s bank to obtain the auto loan payment information so he could issue the check, but the bank refused to provide the information citing privacy issues. The bank told Messing that if the owner called the bank and authorized the release of the information, it would provide the information to Messing.

Messing then contacted the owner and asked that he call the bank to provide the release. The owner told him he would do so and that he would call Messing back after he contacted the bank. However, the owner neither called the bank nor returned the call to Messing. The owner further withheld from Messing that he had given John Gray, the owner’s loan officer at the bank, permission to release the payout figure to Messing.

After not hearing from the owner, Messing called Attorney Megna, who conveniently was not in the office and could not be reached. Moreover, Megna’s office did not inform Messing that it had the payout number from the bank.

Because Messing did not have the requisite information to issue a refund check to both the owner and the bank, Mercedes-Benz did not issue a refund check to the owner within Wisconsin’s statutory 30-day statutory deadline. As a result, the owner’s attorney filed a lawsuit the next day alleging Mercedes-Benz violated Wisconsin’s Lemon Law.

The complaint was actually dated November 28, 2005, meaning that Attorney Megna was getting ready to seek the damages the very same day that he and his client were withholding information and failing to respond to Messing’s phone calls.

Lower Court Decisions

The case started in Waukesha County Circuit Court, where a judge ruled in favor of the owner. The case was appealed to the court of appeals, which reversed the lower court. The court of appeals held that a consumer who intentionally thwarts a manufacturer’s efforts to provide a refund within the 30-day statutory period cannot recover the Lemon Law’s stiff remedies. The court remanded the case back to the circuit court for the jury to determine whether the owner intentionally thwarted Mercedes-Benz’s attempt to provide a statutory refund within the 30-day period by failing to provide the requisite bank information.

On remand, the jury found in favor of Mercedes-Benz. The jury determined that the owner and his attorney, Megna, acted in bad faith by failing to call the bank so that Mercedes-Benz could access the bank account information.

The circuit court judge, however, overturned the jury’s verdict by issuing a directed verdict in favor of the owner. The judge determined there was no credible evidence that the owner (or his attorney) intentionally thwarted Mercedes-Benz’s efforts to provide a refund.

The case went straight to the Supreme Court, which affirmed the judge’s directed verdict in favor of the owner.

Despite the overwhelming evidence pointing to the owner and his attorney acting in bad faith, the majority found that the “jury’s verdict impermissibly rest[ed] on ‘conjecture and speculation.’”

According to the majority decision, the “jury’s finding that on November 28 the consumer intentionally prevented Mercedes-Benz from complying with the Lemon Law was impermissibly speculative.” The majority further stated that the record contained no evidence of any such intentional conduct by the owner or his lawyer to bar the manufacturer from the Lemon Law’s remedies.

Justice Roggensack’s Dissenting Opinion

Justice Patience Roggensack wrote a separate dissenting opinion arguing that the Court should have upheld the jury’s verdict in favor of Mercedes-Benz. According to Justice Roggensack, there was “credible evidence to sustain the jury’s finding that [the owner] did not act in good faith in his dealings with Mercedes-Benz.”

Justice Roggensack cited to all the evidence in the record that proved that the owner was not acting in good faith when dealing with Mercedes-Benz’s representative, who attempted to provide the owner the refund within the statutory deadline. Justice Roggensack noted that the owner told Messing that he would call his bank to release the loan payment information, however, the owner neither called the bank nor called Messing back. Furthermore, the owner failed to tell Messing that the owner had given his loan officer, John Gray, permission to release the payout figure of his auto loan.

Moreover, Attorney Megna conveniently couldn’t be reached the very last day that the refund payment was due and never called Messing back. Megna’s paralegal also failed to tell the Mercedes-Benz representative that Megna’s law office had the payout number from the bank.

Despite all of the credible evidence demonstrating that the owner (and his attorney) did not act in good faith, the majority still upheld the lower court’s directed verdict and swept aside the jury’s verdict in favor of Mercedes-Benz.

Practical Effect of Decision for Automobile Manufacturers in Wisconsin

Justice Roggensack explained that he majority’s decision has effectively eliminated manufacturers’ affirmative defense when an owner has acted in bad faith by intentionally preventing the manufacturer from refunding the owner.

Under the majority’s reasoning, no affirmative defense of thwarting a refund will be allowed unless the manufacturer can prove that the owner had knowledge of the legal effect of his conduct on the statutory obligations that the Lemon Law places on the manufacturer.

For example, in its decision, the majority held that the manufacturer had to prove that the owner knew that the statutory remedies would be triggered if the manufacturer did not pay him the refund on or before November 28. That was the day that the Mercedes-Benz representative called the owner and tried to get the auto loan information. According to the dissent, if this is indeed the new standard, it will be all but impossible for manufacturers to prove the owner acted in bad faith because most automobile purchasers are not attorneys and do not have knowledge of the Lemon Law’s requirements and statutory deadlines.

Decision Allows Plaintiff Attorneys Ability to Game the System

The majority’s decision will make it that much easier for the Lemon Law King and his plaintiff attorney cohorts to use Wisconsin’s Lemon Law as a way to win huge damage awards by stringing out the 30-day statutory deadline requiring the manufacturer to provide a new car or refund.

That’s because under Wisconsin’s Lemon Law, an owner can elect to either seek a similar vehicle or a refund. As in this case, Attorney Megna will simply run out the clock by having his clients seek a vehicle that can’t be obtained within 30 days, and then tell the client at the last second to seek the full refund. Once the owner seeks the full refund, the owner (through his attorney’s advice) will make it next to impossible to get the payment issued and therefore trigger the huge damages.

In this case, the cost of vehicle was roughly $58,000. Had the owner acted in good faith and provided the manufacturer the correct bank loan information, the owner would have been given a check for the vehicle, plus other costs. However, by acting in bad faith and preventing the manufacturer from issuing the refund of the vehicle, the owner and the Lemon Law King will walk away with damages totaling over $700,000.

The Lemon Law King is pictured on his website with his fancy yellow Corvette complete with “LEMN LAW” license plates. Imagine how many more new shiny Corvettes Attorney Megna will be able to purchase with this outrageous damages award handed down by the Wisconsin Supreme Court.

In his free time the Lemon Law King (Attorney Megna) makes strange YouTube videos where he uses obscene language and gestures taunting the Governor.

Madison – The Greater Wisconsin Political Fund has released an ad targeting
Gov. Scott Walker that falsely alleges that he repealed a law making it “easier for corporations to pay women less money than men.”

Opponents of Senate Bill 202 (2011 Wisconsin Act 219), which repeals punitive and compensatory damages under the Wisconsin Fair Employment Act, continue to make this claim despite the fact that multiple non-partisan news organizations have rated such statements as “false” and “misleading”:

Opponents of Senate Bill 202 (2011 Wisconsin Act 219), which repeals punitive and compensatory damages under the Wisconsin Fair Employment Act, continue to make false claims that the law has taken away women’s right to equal pay and thus is part of an overall “war on women.” (more…)

In a 5-1 decision – authored by Justice Ann Walsh Bradley, joined by Chief Justice Shirley Abrahamson, and Justices Patrick Crooks, Annette Ziegler and Michael Gableman – the Court held that Wis. Stat. § 102.17(1)(d) did not allow Aurora Consolidated Health Care (Aurora) the right to cross-examine a physician appointed by LIRC who determined that the injured employee was permanently and totally disabled as a result of a work injury. Justice Patience Roggensack authored a lone dissenting opinion, and Justice David Prosser did not participate in the case.

Facts of the Case

The case involved a long set of facts describing the numerous physical ailments of the employee in this worker’s compensation case. The employee, Jeffrey Schaefer, had a preexisting back injury, and necrosis of both hip joints, for which he had hip replacement surgery. The back injury was directly attributed to a work-related slip and fall. However, it was not clear whether his other injuries were work related.

At a Department of Workforce Development (DWD) hearing Schaefer was the only witness. However, pursuant to Wis. Stat. § 102.17(1)(d), both Schaefer and Aurora submitted written reports from medical experts opining on the extent of Schaefer’s disability that was work related.

The case was subsequently reviewed by Labor & Industry Review Commission (LIRC), which remanded the case back to DWD and ordered that the agency appoint an “impartial” physician, pursuant to Wis. Stat. § 102.17(1)(g), to assess what portion of Schaefer’s disability was due to his hip condition and hip surgery.

The DWD-appointed physician issued a report opining that Schaefer could stand, sit, or drive for one half hour before changing positions. The state-appointed physician also said that Schaefer should not lift more than 10 pounds on a frequent basis, with 20 pounds being his maximum. The physician also attributed all of the restrictions on Schaefer’s work related injury.

Schaefer argued that the physician’s report was incomplete, and therefore LIRC remanded to DWD a second time and ordered the state appointed physician to answer a number of questions. The state-appointed physician determined that Schaefer could work eight hour days if he remained within the restrictions of the first report. The physician further noted that Schaefer should given approximately two brief 10-minute breaks per day. In addition, the physician stated that the chronic back pain could flare up from time to time and in those circumstances the pain would be so severe that no work would be possible. The physician estimated that this could happen about two times a month.

Based on the state-appointed physician’s report, Aurora requested a remand to DWD to allow it to rebut the physician’s opinion by questioning him. However, LIRC denied Aurora’s request. Both the circuit court and court of appeals affirmed LIRC’s decision and held that neither the statute nor the Wisconsin Constitution gives a party the right to cross-examine a state-appointed physician’s report in a worker’s compensation case.

Supreme Court Decision

The Supreme Court affirmed LIRC’s decision and the two lower court decisions. The case involved the proper statutory construction of the laws allowing administrative law judges to appoint independent physicians in worker’s compensation cases.

Specifically, at issue was whether Aurora had the authority to “rebut” the state appointed physician’s report by cross-examining the physician. The majority decided that “rebut” does not mean that parties involved in a worker’s compensation case can cross-examine the state appointed physician.

The majority also rejected Aurora’s argument that it has a constitutional right to cross-examine the state appointed physician under Art. I, § 1 of the Wisconsin Constitution. According to the majority:

We acknowledge the important role that cross-examination plays in the adversarial system, in which the goal is a search for the truth. Nevertheless, it does not rise to the level of a due process right in all instances.

The majority further determined that “given our determinations that Aurora had no statutory or constitutional right to cross-examine Dr. Ebert, LIRC’s decision to decline Aurora’s request was discretionary.”

Dissenting Opinion – Justice Roggensack

Justice Roggensack authored the lone dissenting opinion. In it, Justice Roggensack focused on the word “rebut” and determined that it “encompasses more, not less, than a provision providing only for cross-examination.” According to Justice Roggensack, the “statute affords the parties the opportunity to present additional evidence at a future hearing, which evidence may be presented by direct examination and by cross-examination.”

Justice Roggensack further found that in this case Aurora’s due process rights were violated because the state-appointed doctor’s opinion “could not be explored and it was the basis for LIRC’s decision.”